Federal Deficit Rose to $1.8T in FY 2024, Despite Strength of the Economy

WASHINGTON — The federal budget deficit rose to $1.8 trillion in the 2024 fiscal year, reaching its highest level in three years and exceeding last year’s deficit by $138 billion, the Treasury Department announced Friday.

The numbers, which confirm Office of Management and Budget estimates, underscore the nation’s continued reliance on borrowed money despite enjoying a prolonged period of economic growth.

As a percentage of the United States’ gross domestic product — defined as the total value of goods and services provided in a country in the course of a year — the deficit was 6.4%, up from 6.2% in fiscal year 2023.

A lengthy joint statement from Treasury Secretary Janet Yellen and Shalanda Young, director of the OMB, suggested the increase in the deficit stemmed from tax revenue failing to keep pace with the rising costs of government programs and the mounting interest on the national debt, which is approaching $36 trillion.

Government receipts totaled $4.9 trillion in fiscal year 2024, while outlays were $6.8 trillion.

Total federal borrowing from the public increased by $2 trillion during FY 2024 to $28.2 trillion. 

The increase in borrowing included $1.8 trillion in borrowing to finance the deficit as well as $0.1 trillion in net borrowing related to other transactions such as changes in cash balances and net disbursements for federal credit programs. 

As a percentage of GDP, borrowing from the public grew from 96% of GDP at the end of FY 2023 to 98% of GDP at the end of FY 2024.

Along with the sobering news, Yellen and Young emphasized a number of positives. They noted, for instance, that under the Biden-Harris administration, the U.S. economy has created over 16 million jobs, and that unemployment remains the lowest, on average, of any administration in 50 years.

They also said that workers’ incomes have increased by nearly $4,000, after adjusting for inflation.

“The U.S. economy continued to demonstrate its strength and resilience in 2024, with inflation having fallen more than two thirds from its peak while the labor market remains strong. Anchored by strong household consumption and strong business investment, GDP growth has remained healthy even as inflation normalizes,” Yellen said in the written statement. 

She also said the administration remains focused on the economy’s long-term growth, which includes continued investments in infrastructure, advanced manufacturing, and clean energy while also addressing our long-term fiscal outlook.

“The budget put forward by President Biden reduces the deficit by $3 trillion by asking corporations and the wealthiest Americans to pay their fair share, while preserving our important investments in our country’s future,” Yellen said.

Despite the year-to-year rise in the deficit, the Treasury Department said the administration has actually trimmed it by some $1.3 trillion since taking office.

“In addition, the president has also signed into law another roughly $1 trillion in deficit reduction over the next decade through the Fiscal Responsibility Act of 2023, and through Inflation Reduction Act provisions that empower Medicare to negotiate lower prescription drug prices and make our tax system fairer by making billion-dollar corporations pay a minimum tax and enabling the Internal Revenue Service to crack down on wealthy tax cheats,” the release from the Treasury said.

Like Yellen, Young also accentuated the positives in the fiscal year-end report, emphasizing the strength of the economic recovery, the progress the administration has made in lowering costs, and Biden’s focus on continuing to grow the economy from “the middle out and bottom up.”

“We will build on this progress to make sure the middle class has a fair shot and we leave no one behind,” Young said.

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